Saturday, July 13, 2013

Peter Schiff Discusses The Future For Gold & Treasury Prices

Peter Schiff speaks with Rick Santelli about the Fed's recent open mouth policy and the long term impact of their QE policy. He feels that while shorting treasuries could be dangerous in the short term based on the size of the recent decline in prices, the longer term short position is still "the" trade.

Graphic Look At The Intensity Of China's Physical Gold Accumulation

I commented on this subject earlier in the week in As Paper Gold Shorts Push All In China Buying Goes Parabolic, and the following infographic helps drive home more of that discussion. The power shift from West to East in the physical gold market is extraordinary.


Friday, July 12, 2013

Santelli Discusses The Fed's Confused & Destructive Policies

Rick Santelli, who has become the lone voice of reason on the dying CNBC network, has a brief opportunity to provide his thoughts on the Fed.

There is a lot Santelli touches on here which I would like to come back to in full discussion over the weeks ahead, such as the impact of QE on savers and the reality of the government jobs reports, but we'll let him express his anger in one of the few real moments of television you will find all day long.

Thursday, July 11, 2013

As Paper Gold Shorts Push All In China Buying Goes Parabolic

The following chart from U.S. Global Advisors is pretty amazing. The grey area in the chart shows total worldwide global gold production. That is new supply.

The red lines show the Shanghai gold physical delivery or a representation of China's gold accumulation. The blue line shows the COMEX physical delivery. The paper price of gold is set on the COMEX in America, which is controlled in the short term by the paper contract players.

After the gold smash beginning in April, you can see that China moved from a position of accumulating a large percentage of total mine production, as they have steadily over the past few years, to accumulating ALL of the global mine production. Click for larger image:

They have taken the recent gift provided by the paper shorts to wipe out all the new physical gold entering the market. Here is a quick update of how the paper shorts are currently set up at the moment. A sharp rise in prices could be a very big problem for the traders that have now moved all in betting on gold's continued decline from here:

On the COMEX exchange, it is widely known that the physical gold is just a fraction of the paper gold it backs, making the idea that gold prices are set by that exchange almost laughable. It is a game of musical chairs at the COMEX and the first sign of a run will wipe out their available physical gold instantly. In other words, they will have to "settle" contracts in paper, sending people a check in the mail at the time they will need their physical metal the most.

We have discussed this COMEX topic many times over the past few years so it is nothing new. What is new is what has occurred just this past week at the Brinks Depository. The CME is reporting they have had a 70% decline in their available physical metal, which is the cliff drop on the bottom side of the chart below.

Where has this metal gone? This is just a small taste of what is to come during the run on physical.

I have no idea how low gold will go before the paper price bottoms, but the scenario above which is the artificial paper price meeting what is actually taking place in the physical world, is what will set up the final super spike in prices.

h/t Money Morning, Zero Hedge, Jesse's Cafe Americain

Wednesday, July 10, 2013

David Stockman Discusses The Fed Losing Control

David Stockman, former U.S. politician and author of one of this year's best books The Great Deformation, discusses the bubble in the bond markets and how the Fed impacts the economy.